Cisco rose 35%, is there still hope?

Cisco's stock price has risen by 34.6% over the past year, mainly benefiting from the AI boom—AI infrastructure orders have doubled from 2 billion, exceeding management expectations. Just the AI orders from large-scale cloud vendors have reached 1.3 billion, and the company predicts it can generate 3 billion in AI revenue this year. Network products have seen double-digit growth for five consecutive quarters, thriving across the board from data centers to campus networks.

New products are also being launched: Cisco 8223 routing system, P200 chip, and a collaboration with NVIDIA on AI factory certification solutions. Webex is also adding AI features. The earnings guidance is good as well—this year's revenue is expected to be between 60 billion and 61 billion, compared to last year's 56.7 billion, and EPS is expected to be between 4.08 and 4.14, an increase from last year's 3.81.

But there is a problem here: the valuation has already stretched. The PS ratio is 5.01X, while the industry average is 4.56X, which is directly at a premium. Competition is also fierce—why hasn’t HPE risen? The analyst's rating is Hold, meaning wait for a cheaper entry.

Summary: The AI story is good, but the price has already reflected this story. There is considerable short-term risk.